Wall Street rises, bond yields dip ahead of US inflation data

Wall Street equity indexes were up 1% on Monday while U.S. Treasury yields fell from an almost six-week high as investors bet that key U.S. economic data due out on Tuesday would show inflation is easing.

The US Bureau of Labor Statistics is scheduled on Tuesday to release January’s Consumer Price Index (CPI) data, which is expected to show how effective Federal Reserve policy tightening has been in taming inflation so far.

US equities lost some ground last week but had rallied in the initial weeks of 2023, buoyed by the prospect of slowing inflation that could allow the Federal Reserve to slow or pause rate hikes.

“Investors are positioning themselves ahead of what they believe will be a favorable inflation report which could trigger an upward move in equity prices,” said Sam Stovall, chief investment strategist at CFRA Research in New York.

A decline in gold and oil prices also reflected expectations of an easing of inflationary pressures, according to Stovall.

With a whole host of economic reports due out this week including retail sales and industrial production, Brian Klimke, investment director at Cetera Investment Management LLC, said he expects more volatility as investors reconcile the data with expectations around what the Fed might do.

The Dow Jones Industrial Average rose 282.33 points, or 0.83%, to 34,151.6, the S&P 500 gained 34.64 points, or 0.85%, to 4,125.1 and the Nasdaq Composite added 135.11 points, or 1.15%, to 11,853.23.

The pan-European STOXX 600 index closed up 0.90%. Emerging market stocks rose 0.03%.

The MSCI All-World index, which includes stocks across the globe, gained 0.67%. After rising more than 8% in the first five weeks of 2023, it fell 1.3% last week.

In U.S. Treasuries, benchmark 10-year yields turned lower after earlier hitting their highest level since early January.

Benchmark 10-year notes were down 2.6 basis points to 3.717%, from 3.743% late on Friday. The 30-year bond was last down 3.6 basis points to yield 3.7897%. The 2-year note was last was up 2.3 basis points to yield 4.5365%.

After rising earlier, the dollar fell against a basket of major currencies and was down 0.251%, with the euro up 0.37% to $1.0715.

However, the greenback touched its highest against the rate-sensitive Japanese yen since January 6 on bets the Fed would keep monetary policy tight for longer.

Also sources had said on Friday that former Bank of Japan board member Kazuo Ueda is set to become the next governor. In an interview the same day, Ueda said it was appropriate for the BOJ to maintain its current ultra-easy policy.

The Japanese yen weakened 0.79% versus the greenback at 132.47 per dollar, while Sterling was last trading at $1.2131, up 0.61% on the day.

Oil prices rebounded from early losses to settle slightly higher as investors weighed Russian plans to cut crude production and short-term demand concerns ahead of U.S. inflation data.

U.S. crude settled up 0.5% at $80.14 per barrel and Brent finished at $86.61, up 0.25% for the day.

Spot gold dropped 0.6% to $1,852.69 an ounce. U.S. gold futures fell 0.69% to $1,851.90 an ounce.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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